TMI Blog1966 (6) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... ame and therefore the imposition of surcharge in pursuance of the provisions of the Act is unauthorised. 2.. The only question for consideration, therefore, is whether the State Legislature had power to enact the Act. Petitioner's counsel contended that the only entry which may possibly justify this legislation is Entry 54 in List II in the Seventh Schedule to the Constitution but that that entry would not take in a levy like the one in question. Section 3 of the Act provides as follows: "(1) The tax payable under the Travancore-Cochin General Sales Tax Act, 1125, or the Madras General Sales Tax Act, 1939, shall, in the case of a dealer whose turnover exceeds thirty thousand rupees in a year, be increased by a surcharge at the rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat surcharge is a tax on tax, that Entry No. 54 in List II will justify only a legislation imposing a tax on sale of goods, that tax on sale of goods is a tax on the sale itself and that since the dealer cannot pass on the incidence of surcharge to the purchaser or consumer, surcharge is really a tax on the dealer himself and not a tax on the sale of goods. This argument has no substance in it. The Supreme Court in Konduri Buchirajalingam v. State of Hyderabad[1958] 9 S.T.C. 397. has observed: "It is then said that the sales tax is essentially an indirect tax and therefore it cannot be demanded of the appellant without allowing him to recoup himself by collecting the amount of the tax from the persons with whom he deals. This Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in M/s. George Oakes (Private) Ltd. v. The State of Madras[1961] 12 S.T.C. 476. would further show that the sales tax charged by a dealer is really a part of the price of the articles sold by him. If that be so, I am unable to agree with the contention of counsel that the surcharge imposed in this case is a tax on tax. The preamble to the Act makes it clear that the object of the Act is to increase the sales tax payable by a dealer. The preamble reads as follows: "Whereas it is considered necessary to increase the taxes on agricultural income, taxes on the sale or purchase of goods and taxes on profession, by the levy of a surcharge on such taxes." No doubt, counsel for the petitioner said that by the use of the expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax by way of surcharge. Article 271 reads thus: ''Notwithstanding anything in Articles 269 and 270, Parliament may at any time increase any of the duties or taxes referred to in those articles by a surcharge for purposes of the Union and the whole proceeds of any such surcharge shall form part of the Consolidated Fund of India." The contention of counsel for the petitioner was that unless there is express authorisation for the State Legislature also to impose surcharge, there is no power in that behalf for the Legislature to enact a measure for that purpose. In order to understand the meaning of that article, it is necessary to look at Articles 269 and 270. Article 269 provides that the Government of India shall levy and collect the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form part of the Consolidated Fund of India. It was to avoid a possible contention on the part of the States that the surcharge levied and collected by the Union should also be assigned to the States by the Union or distributed between the Union and the States, that Article 271 was enacted, providing that notwithstanding the fact that the taxes and duties levied and collected under Articles 269 and 270 must be assigned to States or distributed between the Union and the States as the case may be, the surcharge shall form part of the Consolidated Fund of the Union. In other words, the Parliament may impose a surcharge on the duties and taxes mentioned in Articles 269 and 270 and credit it to the Consolidated Fund of the Union exclusively. But ..... X X X X Extracts X X X X X X X X Extracts X X X X
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